UK anti-bribery legislation impact SA organisations – PwC

The United Kingdom succumbed to the criticism of its international counterparts related to its outdated anti-bribery legislation when it recently implemented the Bribery Act, which provides a new, modern and comprehensive scheme of bribery offences that will enable courts and prosecutors to respond more effectively to bribery both locally and internationally.

Many South African companies have not familiarised themselves with the details of the Bribery Act and are unaware of the implications of this new legislation could have on their businesses. As one of the toughest anti-bribery acts in existence, South African companies can’t simply ignore this legislation as they might find themselves on the wrong side of the law.

Companies registered in the UK are facing three potential offences. A general offence of offering or receiving bribes, a specific offence of bribing or receiving bribes and an offence on failing to prevent bribery. However, these rules are not only aimed at UK companies.

Corporate entities which are not registered in the UK but which do business in the UK can also be charged with the offence of negligently failing to prevent bribery on their behalf. Equally, British citizens or ordinary residents in the UK can be charged with offering or receiving bribes and, with bribing a public official.

Maadian Botha, Advisory Partner from PricewaterhouseCoopers (PwC) says, ‘’It doesn’t matter where in the world these offences are committed, corporates and individuals who have dealings in the UK will be subject to comply with the legislation. For this reason, it is vitally important for South African organisations to establish adequate processes and procedures for compliance with anti-bribery legislation.”

The penalties for being found guilty of committing any bribery offence could see the offending party face unlimited fines or even be disbarred from tendering for government contracts. In addition, individuals could face a maximum 10 year prison sentence. This includes senior officers of companies held liable for their consent to corrupt activities.

The Corruption Perceptions Index (CPI) which measures the perceived level of public-sector corruption confirms the need of a stronger stance against corruption around the world. South Africa is rated at level 4.7 which is significantly better than Russia at 2.2 yet worse than the UK which is currently at UK 7.7.

“To effectively address the legislation and improve our international standing on the CPI, top management will need to drive the process and take the time to ensure that all levels of management adhere to the new procedures,” says Botha.

Business leaders must take a proactive approach by raising anti-bribery awareness. Many functions need to be involved in developing and maintaining a working anti-bribery campaign including legal, compliance, internal audit, HR and finance. Compliance help lines and whistle-blowing facilities should be established to ensure that employees have access to adequate support mechanisms. Controls like these should however a part of the daily business be as usual operations of entities in South Africa, based on the requirements posed by the Prevention and Combating of Corrupt Activities Act, which came into operation during April 2004.

Regulators have already expressed their intent to take a tougher stance against bribery and corruption. SMEs intending to attract international investments should be taking note of these occurrences to ensure the success of their business and its contribution to the South African economy.

“Companies that implement policies that attempt to address every possible scenario that could lead to corrupt activities will have their work cut out for them. Therefore, it is advisable to develop and embed clear values which require employees to make ethical decisions in any situation they may face,” continues Botha

PwC highlights five key steps that South African business should be taking to develop a holistic anti-bribery programme.

Gain Board Commitment

For an anti-bribery programme to work, the board must indicate the importance of the programme and support the values by committing adequate resources to its development. In many cases, the board members should commit to training. Not only will this allow them to set a strong example for employees, it will also ensure that the board has a sound understanding of the anti-bribery legislation and its implications.

Conduct a global risk assessment

Existing guidelines call for organisations to identify high risk areas where potential exposure to bribery and corruption may exist. Smaller operations in developing countries like South Africa might have higher exposure to levels of risk. Higher risk areas should be addressed first.

Develop an anti-bribery implementation plan

Prioritising high risk areas is essential since the implementation of a comprehensive anti-bribery strategy could take many years. The implementation plan must contain sufficient detail and demonstrate to a regulator or a court that the organisation is committed to establishing its anti bribery programme.

Establish governance structures

The anti-bribery programme must have a number of functions who act as corporate gatekeepers. Their roles and relationships in terms of the anti-bribery programme need to be clearly defined. Oversight arrangements are another essential aspect that must be established. For example, involving a non-executive committee with a compliance remit, this may be the audit committee, the risk committee or a specific compliance committee.

Establish a values and rules hierarchy
Every organisation should create a code of ethics or code of conduct. If these already exist within the organisation, it should be reviewed and upgraded to meet the new requirements. All codes must be supported by policies which give a more detailed statement designed to ensure that the aspirations of the code of conduct are related to the operational business.

In addition to these five steps, organisations should also consider the following:

Embedding the anti-bribery framework in the business;
Review disciplinary and HR procedures;
Manage third party compliance risks;
Ensure adequacy of monitoring and reporting procedures; and
Ensure adequacy of monitoring and reporting procedures.

Botha concludes, “Implementing these processes not only ensures that you comply with the legislation, it also provides organisations with the opportunity to restructure and promote ethical business practices. The need to commit sufficient time and resources to this process is worth emphasising again as companies who comply with anti-bribery legislations have the ability to attract international investment and secure new business.”